Why Our NOA in Canada Matters

Last week, Lilly filed a Notice of Arbitration as a next step in resolving an emerging legal issue in Canada: a needlessly complex process for keeping medicines on the market throughout their full patent life.

Our $500 million suit seeks to address the loss of revenue from the improper invalidation of patents for Zyprexa and Strattera - two of roughly 20 medicines that have been invalidated by the Canadian court system. We know there are a lot of perspectives about whether the lawsuit should have been filed. Here's ours:

As our general patent counsel, Doug Norman, said last week:

"Patent decisions in Canada over the last decade not only fly in the face of long-established international standards, but they're subjective and completely unpredictable. The standard seems to be that there is no standard. The NOA is the next natural step in Lilly's continuing efforts to address financial losses from improper invalidation of our Strattera and Zyprexa patents under Canada's 'promise utility doctrine.'

"The promise doctrine is a creation woven from federal court decisions made since 2005. It's impossible to know what specific "promise" can be implied from an application, and how much data are needed to support it. If this pattern persists, the already challenging business of medical innovation will become all the more difficult in Canada."

The so-called "promise doctrine" is the centerpiece of Canada's string of confounding patent decisions (while simultaneously creating an environment not found in other similarly developed countries). Here's what happens: an inventor must provide information describing the new invention when filing a patent application. The internationally accepted standard for patent protection is that the invention must be novel, not obvious, and "useful or capable of industrial application."

But Canadian judges since have strayed from this standard -- instead assessing the utility of a patent by referencing a so-called "promise." To gain a patent in Canada, the inventor must "soundly predict" how that invention will be used (with all content in the original application used to imply a "promise" of that invention). According to Canadian judges, if the specific promise is not fulfilled, the patent is not useful.

The bottom line: biopharmaceutical companies face a real-time catch-22 (and a bar that's almost impossible to meet). A company can prove an invention is new by patenting it without Phase II data -- but that opens the new product up to challenges for lacking utility. Or, the company can meet the utility requirement by conducting Phase II human clinical trials before seeking the new patent, but this can prevent the patent from being granted because the invention will no longer be new.

It's an irony that ultimately cripples medical innovation. There's no realistic way to satisfy both these needs in the patent application process -- setting up new treatments for relatively short lives on the Canadian market. And while we believe patients have a right to generic alternatives once patent protection has run its course, we don't believe an overly complex system -- in fact, an unfair system -- is the right path forward.